Latest data available, updated 28 June 2024
Wage growth in public sector returned to the trend.
Australian wage rates grew by 4.1% p.a. in the year to the March quarter of 2024. Following a period of low growth since late 2021, annual wage growth was 4.1% slightly down from the 4.2% annual rise recorded December 2023. Annual wage growth has been treading water at around 4.1 to 4.2% p.a. since 2023, well above the long-run average of 2.4% p.a.
Employee earnings grew by 4.5% p.a. in the year to November 2023. Employee earnings are growing faster than wage rates due to an increase in hours worked in the current labour market cycle. The current rate of earnings growth is above its long-run average of 2.8% p.a.
Private sector wages growth (4.1% p.a.) is currently higher than in the public sector (3.8%). Employee earnings growth follows the opposite pattern (4.9% p.a. public versus 4.4% private). The easing in wages growth in the public sector indicates large state government enterprise agreement’s returned to normal pattern of wage increases after a period of strong rises.
Wage rates are currently growing at above average rates in industries facing acute skills shortages – particularly health care, education and training, administration, ICT, retail trade, transport, manufacturing, accommodation and food, and construction. Industries with lower wage growth are financial and insurance, art and recreation, wholesale trade, public administration, utilities, and real estate.
RBA has increased the forecast that wage increase will peak at 4.2% in mid-2024 while treasury has reduced its forecast to 4.0%, before easing slightly towards 3.25% in 2025. This reflects that the tight labour market in Australia is expected to ease gradually to the end of 2025. These forecasts indicate that wage increases will exceed the long-term average (2.4%) through to 2025.
Newly-approved EBAs averaged a 3.9% p.a. increase in the March 2024 quarter, with private sector EBAs slightly lower at 3.6%. This is the lowest rate in approved EBA wages seen since the beginning of 2023.
The FWC National Minimum Wage increase for 2024-25 is 3.75%. This follows two years of record-setting increases. Recent minimum wage decisions have been well-above underlying economic performance (as measured by GDP growth).
The Wage Price Index (WPI) measures changes in the wage rates of Australian employees across the economy. It is calculated using a similar methodology to the Consumer Price Index, based on a representative ‘basket’ of occupations in each industry and location. The WPI is generally seen to be the most timely and reliable indicator of the rate of change in wages across the economy.
The Average Weekly Ordinary Time Earnings (AWOTE) indicator measures changes in the earnings (i.e. take home pay) for full-time adult employees. Unlike the WPI, the AWOTE is affected by compositional changes in the workforce (such as changes in industry and occupation). AWOTE provides an indicator of changes in the total value of wages paid in the economy that reflects the current composition of the workforce.
The Average Annual Wage Increases (AAWI) indicator measures the average wage increase agreed in federally-registered Enterprise Bargaining Agreements (EBAs). Two series are provided: wage increases in newly approved EBAs during the quarter, and wage increases occurring in the quarter as a result of previously-approved EBAs. Only those EBAs with ‘classifiable’ wage increases (i.e. those which can be numerically expressed at the time of agreement) are included in the data. The newly-approved AAWI series provides an indicator of recent movements in EBA wage outcomes.
The National Minimum Wage (NMW) is determined by the Fair Work Commission annually for each financial year. It sets the minimum hourly rate for employees with receive the NMW, and influences awards which are linked to it. Approximately one fifth of the Australian workforce receive the NMW or an NMW-linked award rate.
Sources: The data in this factsheet are derived from various ABS labour surveys and other official sources. Data is collected on a quarterly or biannual basis, and is typically released two or three months following the reference period. Ai Group Research & Economics will update this factsheet as new data is released. Refer to notes in the charts for links to the source data.
Ai Group Research & Economics Team
Website: Research and Economics Resource Centre
Email: economics@aigroup.com.au
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